Former chancellor Lord Philip Hammond has told Boris Johnson to ditch his plans for big infrastructure projects in the North, with the UK facing its largest ever Budget deficit.
Hammond said today that a better way to enact Johnson’s “levelling up” agenda was for more devolution to regions, while also calling for tax rises and spending cuts in tomorrow’s Budget.
Sunak’s Budget is expected to a mix of funding for Covid support extensions – including the furlough scheme, VAT cut for retail and hospitality and business rates holiday – as well as an increase in corporation tax.
Rishi Sunak has said he will “level” with people about the state of the nation’s finances as the Budget deficit is set to exceed £400bn.
“I think we have got to get a balance right between restraining public spending and increasing taxes and we’re going to have to do both,” Hammond told Times Radio.
“Anybody who says that the challenge can be met only by increases in taxation, or only by cuts in public spending is not being straight with people. And the scale of this problem means that we are going to have to do both.”
Hammond added that the government should find ways to “level up” the North and the Midlands other than expensive infrastructure projects.
“It’s about thinking about the way we organise and deliver public services,” he said.
“And speaking for myself, and this is a personal view, I have become increasingly convinced that the key to doing this effectively, is to devolve power more effectively to the great metropolitan areas of our country, to allow them to organise public services in a way that reflects the needs of the societies the communities that they serve.”